Author, A Bigger Prize: How We Can Do Better Than the Competition@M_Heffernan

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Throughout his interrogation by Parliament's select committee, former Barclays CEO Bob Diamond insisted that he had learned only "this month" about rigging of the interbank lending rate (LIBOR) ostensibly by 14 traders within the bank. Challenged repeatedly by members of Parliament, with questions like, "What kind of organization were you running?" and "Do you live in a parallel universe?" he steadfastly maintained that he had known nothing about this activity for the five years it took place.

What kind of organization was he running? The honest answer: a pretty normal one. It is not at all unusual for CEOs not to know what is going on at the companies they lead. In fact, it is the norm.

In a New York University survey of American executives, fully 85% said that they had issues and concerns at work that they were afraid to raise. They feared repercussions from co-workers or supervisors. In a similar survey I conducted of European executives, I got the same results. I'd say 85% is a big number and it tells us that, for the most part, people at work do not easily talk about concerns they have about the company, its products, people, or operations.

At the same time, leaders badly need every person in a business to be able and willing to speak up if they know, see, or hear anything that causes concern. Just as in the 1980s, when Japanese car manufacturers empowered every assembly line worker to stop the line if they spotted a fault, so does every company employee need to be free to spot problems and skilled at ensuring they're addressed.

In the workplace today, though, the default behavior is silence. Most business leaders know and believe this, but do nothing about it. They talk about openness, give great speeches about how the door is always open, the messenger will not be shot--but nobody believes them. Why? In part it's because no one has ever seen this in action and may, in fact, have seen the obverse. It is also because there is a huge and emotive mythology around whistleblowers that says they are invariably punished and hung out to dry.

Whistleblowers, specifically, are employees who ultimately go outside their organizations to raise the alarm. They do so, overwhelmingly, not because they are cranks, crazy, or publicity hungry. What the research shows, and my interviews with whistleblowers has taught me, is that whistleblowers are incredibly loyal, dedicated employees who believe passionately in their organizations and the higher purposes they serve. Almost all whistleblowers first try to get internal authorities to address their concerns; they go outside only when frustrated because no one will listen to them.

The classic whistleblower example is Enron's Sherron Watkins who, although known as a whistleblower, in fact never went outside the corporation to report her concerns. She wrote to the chairman and CEO Kenneth Lay, confident that he would--and could--put things right.

Creating the processes and confidence to ensure people will come and tell you the truth is difficult, time-intensive, and requires long-term commitment. It means you have to train people how to know what matters, and impart the skills to communicate that in a way, and to the people, that will ensure it gets heard. A few motherhood statements about openness won't do.